Aluma: Netflix Ranked Most-Essential Streaming Video Service

Netflix invented the subscription streaming video market in 2007. And 16 years later, the service is still the most-coveted household SVOD platform, according to new data from Aluma Insights, which finds two-thirds of Netflix subscribers view the service as indispensable to meeting household video entertainment needs.

Hulu and Disney+ were the only other SVOD services in which more than half of subscribers considered the service essential to their home entertainment needs. On the flipside, Epix (now MGM+), Apple TV+ and Peacock were found to be the least essential streaming services.

“This is a one way of comparing a service’s utility with its competitors,” Michael Greeson, founder of Aluma Insights, said in a statement.

Greeson suggests the data affords some SVODs more latitude when it comes to revenue optimization measures, such as cracking down on freeloading or increasing retail prices.

“To [other services], there is great risk in significantly altering prices or service terms,” Greeson said.

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Indeed, Disney CEO Bob Iger recently disclosed that December’s 38% increase in ad-free Disney+ prices caused minimal subscriber losses, suggesting the service is not yet fully valued. Aluma expects both Disney+ and Hulu subscription prices will increase by around 15% during 2023.

Greeson was surprised to find Apple TV+ and Peacock among the least coveted streaming video services. Apple TV+ is recognized for high-quality original content that resonates well with its subscribers. Then again, it has little depth in terms of third-party content and lower value than most other services, which may have reduced its stickiness, according to the report.

NBCUniversal’s Peacock, despite a 28% increase in paid subscribers during 2022, still suffers from a “failing to launch” mindset among many consumers, according to Aluma.

With corporate owner Comcast eliminating the service’s free ad-supported tier and phasing out complimentary service for Xfinity pay-TV subscribers, Peacock is set to lose a consumer base accounting for 70% of Peacock’s paid subscribers.

“If 65% of Peacock subscribers consider the service dispensable, and Comcast is ending free service to 70% of Peacock’s subscribers, there is a real risk this strategy will backfire in 2023,” Greeson said.

A greater risk to the less-essential SVOD services is plateauing monthly household spending. Aluma found that in 2022, SVOD households spent on average $43.25 per month on the services, up significantly from 2020 but mostly stable compared with 2021. However, between 2020 and 2022, the percentage of SVOD buyers open to spending more declined from 14% to 8%, while the percentage who planning to reduce these expenses increased from 17% to 25%.

“As buyers move closer to their SVOD spending limits, less essential services will have a difficult time optimizing revenue without enduring sizeable subscriber losses,” Greeson said.